In the world of business, effective marketing is often the secret sauce that transforms a good idea into a successful enterprise. Whether you’re launching a startup, running a small business, or managing a multinational corporation, the principles of marketing are universal. There are a host of frameworks that marketers use across the board. These guiding principles provide a framework of thinking that directs overall strategy and responsibility. While I could select any one of the frameworks, one the most widely accepted and used is the 4 P’s framework.
What Does Each P Stand For?
The name sounds interesting, but if you’ve never been around a business program, you might be thinking “what on earth does that mean?” Fear not! I’m going to walk you through the 4 P’s and talk about the importance of each one.
At its core, The 4 P’s, also known as the marketing mix, are the fundamental elements businesses use to plan and execute their marketing strategies. The name – despite its origins in marketing – is markedly uncreative. Each P stands for a unique aspect of marketing’s responsibility: Product, Price, Place, and Promotion… although, Place is often called distribution by marketers.
So don’t be alarmed when someone says they know the 4 P’s but replaces Place with distribution. Before we jump in, I want to emphasize that there is NEVER a case where one of the P’s should exist in isolation – strategic decisions in each P affect one another. Think of this as a symbiotic ecosystem, where each exists on its own but cannot survive without the others.
Product: The What
Let’s hop into it. Typically, the first of the P’s is listed as Product. This represents the tangible or intangible offering that your business provides to meet customer needs. Your product or service should address a specific problem, fulfill a desire, or offer a solution in a unique way – common sense right?
Well, maybe not. Many companies have given product completely over to the engineering and dev teams. While the creation of a product (technological in nature) should be delegated accordingly, the direction of the offering should come from a place of significant collaboration with Marketing.
As marketers, we have access to tremendous amounts of information and customer feedback. Based on the research (competitive and market), should not only be focused on creating explicit value (think new features or business lines) but also intrinsic value (such as less time to implement, barriers of use, cost to operate).
From a business perspective, these value creation opportunities need to be aligned with your core differentiator. What are you doing that would be difficult to replicate by competitors and what product improvements can you make to further that? As I mentioned before, each P should NEVER exist in its own little world. One of the most important factors to consider is pricing.
Price: Show Me The Money!
Price is one of the most widely known, but misunderstood, of the 4 P’s of marketing. Price seems like a simple decision right? Far from it. Determining the right price for your product is a critical decision that can make or break the entirety of your business. There are many different theories for pricing your product, but at the end of the day it should reflect the perceived value of your product, your production costs, the value of the problem you are solving and your target audience’s willingness to pay. Not only does pricing affect profitability, but it also significantly influences the demand of your product (how many people are willing to pay X price).
Pricing your offering to maximize profit is not necessarily the best course of action depending on your market and your business plan. If you look at a traditional supply and demand graphic, the amount that people demand is directly proportional to the price. Depending on the prevalence of substitutes or competitors, people may be more or less price sensitive. While it is difficult to define exactly how price sensitive the demand of a good is quantitatively, you can determine this anecdotally through observation of your audience’s buying behaviors. Sure, it takes time, but it will pay dividends later on. An obvious but often overlooked fact in pricing (a quote I am stealing from Alex Hormozi), the bigger, more expensive problem you solve, the more you can charge. But expense doesn’t necessarily mean dollars and cents… It also means time, consistency, and quality.
Another important factor to keep in mind is the social norms and purchasing habits of your target market. For example, a cheesesteak is priced similarly across restaurants in Philadelphia. However, there was an entrepreneur who made and marketed a $100 cheesesteak. WHAT?! Yes! But, it wasn’t any ole cheesesteak – no, it was covered in premium wagyu steak slices, lobster, and the most expensive vegetables. The demand soared for the $100 cheesesteak. The buzz around this obscenely expensive but delicious cheesesteak lifted the business from just another cheesesteak place to THE Cheesesteak place. The lesson here is commodities need to be priced similarly to just survive, BUT, if you make your product so unique that suddenly it’s not being compared to the commodity, you have the ability to charge more – even if fundamentally, they accomplish the same thing. In the case of the cheesesteak, satisfying hunger is replaced by status and novelty.
Place... or is it Distribution?
Now we see the importance of making sure your product solves a big enough problem and provides enough value to justify the price. But now, you have to determine how and where you will distribute your offering. To start, you must identify the channels and distribution methods you use to make your product or service available to your customers.
Not only is this how and where your customers will purchase, but how and where your potential customers will see the promotions (the 4th P). Again, it is important to consider where and how your target audience prefers to shop or interact with a brand of your type. This depends heavily on your business model and business type. If you’re Software versus a retail store, your placement strategy is going to be vastly different.
In business school, I found that distribution was often focused primarily around getting the product into consumers hands. However, that is the last stage. Ideally, the strategy of placement/distribution starts at what channels will hear about us (tied closely to promotion of the product). Then, and arguably most importantly, how will consumers purchase the offering.
Designing the awareness channel and purchasing experience can make or break a product launch. As a word of advice, when your prospect is ready to turn into a customer, make sure you have a way for the transaction to occur as quickly and seamlessly as possible. Another shout out to Alex Hormozi for a valuable lesson, make sure you allow people to buy when they are ready.
Now onto the final P of marketing – the one that everyone associates with marketing – Promotion. So what is it? Promotion involves all the strategies and tactics you use to communicate and promote your product. This includes advertising, public relations, social media, and other marketing efforts to create brand awareness and drive sales.
Promotion isn’t just running 50% off sales on black friday or offering a 2 for 1 purchase, but rather it is the strategy of how you are communicating the value of your product. If you look at the most successful marketing campaigns, they don’t talk about the features of the product but they talk about the problem it solves and shows you what life could be like if you purchase the offering. But it goes beyond even that. Promotion is all about how you talk about your brand across the channels. What is your tone of voice? How do you want to be perceived? Should humor be used? In what ways will you educate your audience? These are just a few of the questions that you need to answer as you formulate your promotional strategy.
Keep in mind that your product, price, and placement need to be reflected in your promotional strategy. If you don’t know what problems you are solving, what emotions that causes, and what life could be like for your target market with (and without) your offering, then further refinement of your product needs to occur. Pricing will dictate the types of financial promotions (discounts, volume, bundling ect) that you can absorb. And the placement of your promotions (and offering) should reflect how and where you are promoting- it wouldn’t make sense to sell snowmobiles in the Florida Everglades.
Why Are The 4 P's Relevant?
The 4 P’s are more than a marketing model; they’re a blueprint for business success. But Why? Because every successful business must leverage every piece of marketing to grow. Growth doesn’t happen by accident, it’s an intentional execution of a well thought out and adaptable plan. Plus, the framework forces you to expand your marketing vision beyond promotion, offering you a holistic view of your business as you look to go to market and most critically, stay to market.
Having a structured approach to marketing puts you ahead of many businesses out there. These checks help businesses avoid haphazard decision-making and guide them in a systematic way. By building a plan around these 4 P’s, businesses also ensure they are building what is considered a “whole product” – the entire customer experience from awareness to ongoing support. Ensuring your business revolves around the needs and preferences of your customers, not your own. They compel businesses to consider customer value and experience, which is essential in today’s customer-centric landscape.
While The 4 P’s are a framework, it’s not something that is set in stone, forcing businesses down a singular path. It’s flexible and adaptable. Allowing the plan to be tailored to fit the unique needs and goals of any business, regardless of industry, size, or location.
Reading through each P, it’s evident the model is focused on ensuring every aspect of their marketing strategy works together cohesively, resulting in a consistent brand message and experience for customers. And finally, each of the 4 P’s directly contributes to key business functions and objectives, forcing the collaboration between each functional level and creating a tight knit, well oiled business machine.
In the dynamic realm of business, where innovation and adaptability are paramount, the 4 P’s of marketing stand as an enduring beacon guiding entrepreneurs, startups, and seasoned enterprises alike. Beyond being a framework, the 4 P’s encompass the essence of intentional business growth. This blueprint, weaving through Product, Price, Place, and Promotion, not only ensures a holistic customer experience but also propels businesses toward success.
As you navigate the ever-evolving landscape of marketing, the 4 P’s remain a foundational compass, fostering structured approaches, customer-centric strategies, and adaptable plans. In essence, they’re not just four principles; they’re the threads weaving the fabric of a well-thought-out, customer-focused, and resilient business strategy.